My apologies for not posting the past couple of market days. I have been dealing with issues concerning my main site, dtmagazine.com. Mostly, these issues, from not having email or FTP access and various other problems were caused by the hosting company, x7hosting.com and their complete incompetence in migrating my site - and many others - from one set of servers to another. It is my intention to sue x7hosting.com for four days of lost revenue, aggravation and unnecessary interruption of my business. But that is another matter...
Over the past few days, US indices have taken a bit of a hit. Both Friday and Monday were down days, but Tuesday's mild recovery bodes well for the future of the stock markets. Tuesday's gain began to fill in the gap between Friday's close and Monday's open, and, if there's anything about markets for certain, it is that they always fill in gaps.
So, it is fairly safe to assume that the indices will bounce around current levels for at least the rest of this week. Another huge move to the downside seems unlikely, though a continuance of Tuesday's rally would be unsurprising.
Here are Tuesday's closing numbers:
Dow 9,217.94,+82.60 (0.90%)
NASDAQ 1,955.92, +25.08 (1.30%)
S&P 500 989.67, +9.94 (1.01%)
NYSE Composite 6,437.07, +84.96 (1.34%)
Advancing issues finished well ahead of decliners, 4879-1550. New highs outnumbered new lows, 78-48, a margin that has been narrowing recently, though it would not be a cause for alarm if the new lows took back the lead in coming days. The most significant issue facing the markets right now is how to read the abysmally low volume, though in light of the fact that volume has been off for most of the summer, it's best to attribute that to ongoing summer doldrums and some general investor trepidation about jumping back in at this time.
NYSE Volume 1,045,306,000
NASDAQ Volume 1,760,437,000
Commodities showed generalized strength on the day, with oil up $2.44, to $69.19; gold ahead by $3.40, to $939.20, though silver slipped 2 cents to $13.96 per ounce. Foodstuffs, grains and meats were mostly higher.
The biggest news of the day came prior to the opening bell, as July PPI was released, showing a massive 0.9% decline month-over-month, which has to come as a rejection for the inflationist camp and was met with so many "told you so's" by deflationists that the rancor was deafening.
Lower producer prices are usually the forecaster of tough times for retailers, who have thus far weathered the recession with particular aplomb and grace. Lower prices for all goods and services is in the cards for the next 6-18 months, regardless of the amount of money pumped into the nascent economy by the Fed and Treasury.
While the recession may be slowing, it is still far from over. Germany and Japan may have announced that they were recovering, but it's likely to be another 3-6 months before the US economy gets back on firm footing. Foreclosures are still running very high, as is unemployment. This recession - a surly and deep one that it is - wasn't created in a manner of a few months and it won't go away quickly either.
Look for more sideways trading in coming months and more than enough signs for both bulls and bears to be right occasionally. The US will bounce back, but it's going to take a while.
Tuesday, August 18, 2009
Thursday, August 13, 2009
Equities Maintain Positive Bias
For all the recent talk about the current rally being overextended, there doesn't seem to be much of a rush to sell stocks, which is probably why so many analysts are urging caution. Their hypothesis is that it would be better to take money off the table now, while stocks are still relatively overpriced, than later, when they will probably have fallen 5-10%.
However, with the panic of '08 a fast-fading memory, there is always the possibility that many investors, small and large alike, have taken positions in stocks when they were very cheap just a few months ago, and are probably not in any hurry to sell. After all, that's what the professionals tell us to do: buy, hold and prosper.
That strategy may be a sound one at this juncture. The heyday of day-trading is long past and your average 401k type is not going to be moving money around willy-nilly. Neither are heady fund managers, many of whom were burned badly in the last debacle. The slaughter that began in September 2008 (actually, the slide started in August of 2007) and ended abruptly on March 9, 2009, may have lodged itself firmly in the craniums of the top fund managers. And while they may be quicker on the trigger if things start slipping again, they're seasoned enough to recognize a fundamentally strong market when they see one. A 5-10% correction is not going to move them much, if at all.
The day began with some very ugly retail sales figures for the month of July, with an overall number of -0.1%, and -0.6% ex-autos. The "cash for clunkers" promotion by the government was such a hit that it had to be re-funded by congress, but while people were busy, out buying new cars, they apparently forgot to purchase clothes, batteries, food and other consumables. The numbers reflected the thinking of many who believe that the economy is still not on solid recovery ground, and they may be right, though there's enough activity to believe that the worst is behind us.
The retail sales figures knocked the starch out of stocks at the open, but they quickly rebounded and stayed mostly positive for the remainder of the session, adding another leg to yesterday's rally.
Dow 9,398.19, +36.58 (0.39%)
NASDAQ 2,009.35, +10.63 (0.53%)
S&P 500 1,012.73, +6.92 (0.69%)
NYSE Composite 6,604.10, +65.23 (1.00%)
Advancers were solidly ahead of declining issues, 3987-2444. New highs outpaced new lows, 157-54, and volume was moderate, though the NYSE was very quiet. The day's trading was not very volatile, but the positive tone bodes well for the future, though a slight correction, which everybody under the sun seems to be calling for, would not be a surprise. There still could be more upside before any major bout of profit-taking occurs, since the news flow has been generally good and earnings season is well past.
NYSE Volume 913,417,000
NASDAQ Volume 2,117,709,000
Commodities were mixed, though oil gained 36 cents, to finish the day at $70.52. Gold was up $4.00, to $956.50, while silver was the big winner, gaining 40 cents to $14.99.
Tomorrow morning's CPI report is not likely to cause any consternation in the markets because it will be a rather benign number.
However, with the panic of '08 a fast-fading memory, there is always the possibility that many investors, small and large alike, have taken positions in stocks when they were very cheap just a few months ago, and are probably not in any hurry to sell. After all, that's what the professionals tell us to do: buy, hold and prosper.
That strategy may be a sound one at this juncture. The heyday of day-trading is long past and your average 401k type is not going to be moving money around willy-nilly. Neither are heady fund managers, many of whom were burned badly in the last debacle. The slaughter that began in September 2008 (actually, the slide started in August of 2007) and ended abruptly on March 9, 2009, may have lodged itself firmly in the craniums of the top fund managers. And while they may be quicker on the trigger if things start slipping again, they're seasoned enough to recognize a fundamentally strong market when they see one. A 5-10% correction is not going to move them much, if at all.
The day began with some very ugly retail sales figures for the month of July, with an overall number of -0.1%, and -0.6% ex-autos. The "cash for clunkers" promotion by the government was such a hit that it had to be re-funded by congress, but while people were busy, out buying new cars, they apparently forgot to purchase clothes, batteries, food and other consumables. The numbers reflected the thinking of many who believe that the economy is still not on solid recovery ground, and they may be right, though there's enough activity to believe that the worst is behind us.
The retail sales figures knocked the starch out of stocks at the open, but they quickly rebounded and stayed mostly positive for the remainder of the session, adding another leg to yesterday's rally.
Dow 9,398.19, +36.58 (0.39%)
NASDAQ 2,009.35, +10.63 (0.53%)
S&P 500 1,012.73, +6.92 (0.69%)
NYSE Composite 6,604.10, +65.23 (1.00%)
Advancers were solidly ahead of declining issues, 3987-2444. New highs outpaced new lows, 157-54, and volume was moderate, though the NYSE was very quiet. The day's trading was not very volatile, but the positive tone bodes well for the future, though a slight correction, which everybody under the sun seems to be calling for, would not be a surprise. There still could be more upside before any major bout of profit-taking occurs, since the news flow has been generally good and earnings season is well past.
NYSE Volume 913,417,000
NASDAQ Volume 2,117,709,000
Commodities were mixed, though oil gained 36 cents, to finish the day at $70.52. Gold was up $4.00, to $956.50, while silver was the big winner, gaining 40 cents to $14.99.
Tomorrow morning's CPI report is not likely to cause any consternation in the markets because it will be a rather benign number.
Wednesday, August 12, 2009
Markets Regain Positive Tone on Fed Rate Decision
It may not have been just what the Federal Reserve's Open Market Committee did or said so much as a general mood that they wouldn't do anything to upset the rather delicate balancing act currently underway in world markets.
The Fed, as expected, kept the Federal Funds rate at 0 to .25%, and the discount rate at .50%, said more about improvements in markets than deterioration and slipped in a line or two suggesting that there was no more need for further quantitative easing - they've pledged to buy up to $300 billion in Treasury notes - after the end of October.
For a change, markets were markedly higher prior to the 2:15 pm announcement and changed little afterwards, with stocks more or less drifting at sustained levels into the close. This shows that Fed chairman Ben Bernanke understands the fragility of the situation and is very cautious about how Fed actions are explained to the markets and general public. Nearly a year after the worst financial shock since the Great Depression, Bernanke's Fed has provided leadership and persistence to bring the US and world economies back from the brink of disaster. Whether it's black magic or shrewd understanding of economics, he deserves credit for at least righting a ship that had gone seriously off course.
The next step is to bring back GDP growth, and jobs, no easy tasks, though today's response on the financial markets seem to indicate that the mood of investing professionals has definitely turned the most positive since September of 2008.
Dow 9,361.61, +120.16 (1.30%)
NASDAQ 1,998.72, +28.99 (1.47%)
S&P 500 1,005.81, +11.46 (1.15%)
NYSE Composite 6,538.87, +75.25 (1.16%)
Bolstering the optimistic tone was a return to advancing issues dominating decliners, 4690-1770, More new highs than new lows, 126-53, and a slight uptick in volume.
NYSE Volume 1,306,697,000
NASDAQ Volume 2,154,837,000
Commodities seemed to appreciate the mellow tone of the Fed announcement. Oil gained 71 cents, to $70.16; gold marked $4.90 higher, to $952.50, and silver gained 24 cents, to $14.59.
The Fed decision was crucial for the market to retain confidence. Next up is a broad survey of retail sales on Thursday, with preliminary CPI figures due out Friday, along with Capacity Utilization and Industrial Production reports for July.
The Fed, as expected, kept the Federal Funds rate at 0 to .25%, and the discount rate at .50%, said more about improvements in markets than deterioration and slipped in a line or two suggesting that there was no more need for further quantitative easing - they've pledged to buy up to $300 billion in Treasury notes - after the end of October.
For a change, markets were markedly higher prior to the 2:15 pm announcement and changed little afterwards, with stocks more or less drifting at sustained levels into the close. This shows that Fed chairman Ben Bernanke understands the fragility of the situation and is very cautious about how Fed actions are explained to the markets and general public. Nearly a year after the worst financial shock since the Great Depression, Bernanke's Fed has provided leadership and persistence to bring the US and world economies back from the brink of disaster. Whether it's black magic or shrewd understanding of economics, he deserves credit for at least righting a ship that had gone seriously off course.
The next step is to bring back GDP growth, and jobs, no easy tasks, though today's response on the financial markets seem to indicate that the mood of investing professionals has definitely turned the most positive since September of 2008.
Dow 9,361.61, +120.16 (1.30%)
NASDAQ 1,998.72, +28.99 (1.47%)
S&P 500 1,005.81, +11.46 (1.15%)
NYSE Composite 6,538.87, +75.25 (1.16%)
Bolstering the optimistic tone was a return to advancing issues dominating decliners, 4690-1770, More new highs than new lows, 126-53, and a slight uptick in volume.
NYSE Volume 1,306,697,000
NASDAQ Volume 2,154,837,000
Commodities seemed to appreciate the mellow tone of the Fed announcement. Oil gained 71 cents, to $70.16; gold marked $4.90 higher, to $952.50, and silver gained 24 cents, to $14.59.
The Fed decision was crucial for the market to retain confidence. Next up is a broad survey of retail sales on Thursday, with preliminary CPI figures due out Friday, along with Capacity Utilization and Industrial Production reports for July.
Tuesday, August 11, 2009
Was Friday the Top?
If you're prone to watching the financial news networks - warning, doing so may be harmful to your portfolio - Tuesday must have been like living in a giant echo chamber. Everyone on the air was screaming "sell, sell, sell," neatly flowing into the dwnward trend of the market, for the second straight day.
Anyone who pays attention to the talking heads on CNBC or elsewhere probably noticed that the mood had shifted dramatically from the effusive optimism on Friday to the terrified pessimism on Tuesday. The reasons for the sudden change of heart are manifold and diverse, but the overriding themes were that markets had run too far, too fast, and that the banking sector was being mercilessly pounded.
The crazies on TV are probably not so much in tune with the inner workings of the market as say, your average cat or dog. The downturns over the past week have been generally mild, and today's was nothing really different. Investors were taking profits at the end of a particularly solid earnings season came and went. There's nothing obscene or mysterious about taking some money off the table. In fact, it's rather prudent, sound and eventually productive for the markets. Any money coming out of stocks today will likely go back in within weeks. Traders, being driven alternately by fear and greed, won't sit idle for long, especially if stocks rebound quickly, though a prolonged period of sideways movement cannot be ruled out altogether. By the start of football season, in about 3 weeks, stocks won't be much changed from current levels.
Another consideration is that the financials, which have largely led the most recent one-month rally, are more than a little overbought. Remember, it was less than a year ago that the largest banking institutions in the world were about to implode from various malinvestments and poor money management. Faith in these same companies is fickle and thinly-based. A cyclical movement away from financial stocks and into more fundamental companies like industrials, key services or raw materials makes more sense than an abrupt end to the rally.
Dow 9,241.45, -96.50 (1.03%)
Nasdaq 1,969.73, -22.51 (1.13%)
S&P 500 994.35, -12.75 (1.27%)
NYSE Composite 6,463.62, -86.43 (1.32%)
On top of the aforementioned rationales for the rally not really being over, the lack of volume on Tuesday was really the most telling signal that not everyone was on the CNBC selling bandwagon. To say that the pace of trading was slow would be putting it lightly. Stocks were absolutely crawling off the ticker. There was no sign of the usual rush for the exits that would normally accompany a major sell-off. Losers beat gainers, by a substantial margin, 4682-1745. New highs maintained their edge over new lows, 108-47. The gap between the new highs and lows has narrowed, but nothing, not even our most consistent indicator of market strength or the lack thereof, moves in straight lines.
NYSE Volume 1,325,736,000
Nasdaq Volume 1,975,425,000
Crude oil futures finally cracked down below $70/barrel, losing $1.15 on the day, to $69.45. Gold gained 70 cents, to $947.60, while silver lost a penny to $14.35. Oil prices are likely to be further influenced by Wednesday's weekly inventory report. They continue to defy logic, gravity and natural supply-demand constraints. Oil should be selling for about $45/barrel because there's an absolute oversupply, slack demand and no natural disasters disruptive of supply.
One final caveat on the trading of Tuesday. Some of this can surely be attributed to fear of the Fed, which concludes a two-day meeting Wednesday with the release of their rate statement, which undoubtedly will be unchanged at 0-.25%. The kicker is whether the statement will be rife with discouraging commentary or filled with more hopeful - and helpful - statements. It's likely to be a little bit of both, after which the markets can get back to evaluating stocks instead of musing over macroeconomics.
Anyone who pays attention to the talking heads on CNBC or elsewhere probably noticed that the mood had shifted dramatically from the effusive optimism on Friday to the terrified pessimism on Tuesday. The reasons for the sudden change of heart are manifold and diverse, but the overriding themes were that markets had run too far, too fast, and that the banking sector was being mercilessly pounded.
The crazies on TV are probably not so much in tune with the inner workings of the market as say, your average cat or dog. The downturns over the past week have been generally mild, and today's was nothing really different. Investors were taking profits at the end of a particularly solid earnings season came and went. There's nothing obscene or mysterious about taking some money off the table. In fact, it's rather prudent, sound and eventually productive for the markets. Any money coming out of stocks today will likely go back in within weeks. Traders, being driven alternately by fear and greed, won't sit idle for long, especially if stocks rebound quickly, though a prolonged period of sideways movement cannot be ruled out altogether. By the start of football season, in about 3 weeks, stocks won't be much changed from current levels.
Another consideration is that the financials, which have largely led the most recent one-month rally, are more than a little overbought. Remember, it was less than a year ago that the largest banking institutions in the world were about to implode from various malinvestments and poor money management. Faith in these same companies is fickle and thinly-based. A cyclical movement away from financial stocks and into more fundamental companies like industrials, key services or raw materials makes more sense than an abrupt end to the rally.
Dow 9,241.45, -96.50 (1.03%)
Nasdaq 1,969.73, -22.51 (1.13%)
S&P 500 994.35, -12.75 (1.27%)
NYSE Composite 6,463.62, -86.43 (1.32%)
On top of the aforementioned rationales for the rally not really being over, the lack of volume on Tuesday was really the most telling signal that not everyone was on the CNBC selling bandwagon. To say that the pace of trading was slow would be putting it lightly. Stocks were absolutely crawling off the ticker. There was no sign of the usual rush for the exits that would normally accompany a major sell-off. Losers beat gainers, by a substantial margin, 4682-1745. New highs maintained their edge over new lows, 108-47. The gap between the new highs and lows has narrowed, but nothing, not even our most consistent indicator of market strength or the lack thereof, moves in straight lines.
NYSE Volume 1,325,736,000
Nasdaq Volume 1,975,425,000
Crude oil futures finally cracked down below $70/barrel, losing $1.15 on the day, to $69.45. Gold gained 70 cents, to $947.60, while silver lost a penny to $14.35. Oil prices are likely to be further influenced by Wednesday's weekly inventory report. They continue to defy logic, gravity and natural supply-demand constraints. Oil should be selling for about $45/barrel because there's an absolute oversupply, slack demand and no natural disasters disruptive of supply.
One final caveat on the trading of Tuesday. Some of this can surely be attributed to fear of the Fed, which concludes a two-day meeting Wednesday with the release of their rate statement, which undoubtedly will be unchanged at 0-.25%. The kicker is whether the statement will be rife with discouraging commentary or filled with more hopeful - and helpful - statements. It's likely to be a little bit of both, after which the markets can get back to evaluating stocks instead of musing over macroeconomics.
Friday, August 7, 2009
Jobs Data Sends US Equities Rocketing Higher
An hour prior to the opening bell, the first really strong message that the US economy might actually be entering a recovery appeared in the form of the US Labor Department's July Non-farm Payroll Report, which showed the loss of jobs declining to its lowest level since August 2008. The number of jobs gone begging in July was -247,000, well below the estimated 325-350,000 which had been predicted. The unemployment rate actually fell, due to shrinkage in the total labor pool, down to 9.4%, from 9.5% in June.
Investors cheered the news, at one point sending the Dow Jones Industrials up over 150 points. Afternoon trading trimmed some of the gains, but it was the best showing for stocks in two weeks and the 4th straight week of improvement on the major indices.
The NASDAQ surpassed the magic 2000 mark, while the S&P 500 leaped over 1000. The Dow closed at its highest point since November 4, 2008 (9625.28). Nothing more than continued improvement in employment was needed to send stocks on a tear. If payrolls continue to be slashed at ever-smaller rates, month-over-month, that will be absolutely the tonic the US economy needs to begin a growth path and for companies to eventually begin hiring. The creation of American jobs is the #1 issue facing the economy and the news of the day put a positive tint on the entire labor picture.
Dow 9,370.07, +113.81 (1.23%)
NASDAQ 2,000.25, +27.09 (1.37%)
S&P 500 1,010.48, +13.40 (1.34%)
NYSE Composite 6,586.71, +69.04 (1.06%)
Advancing issues finished well ahead of decliners in the broad-based rally, 4749-1729, while new highs continued to sprout up, numbering 210 on the day, as compared to just 79 new lows. The only small negative was volume, which tracked a bit slower than the previous two down sessions, though not considerably. With the amount of fund money still in hiding, there still seems to be a mood of caution, though Monday may prove to be a test of how long investors are willing to watch profits slip by before taking the plunge back into stocks.
NYSE Volume 1,484,737,000
NASDAQ Volume 2,345,724,000
Commodities were almost uniformly priced lower, with September light crude losing $1.01, to $70.93 and gold slipping $3.40, to $959.50. Silver bucked the trend, gaining 2 cents, to $14.67.
The jobs data was about as positive a sign investors have seen since the depths of the financial crisis in the Fall of 2008 and Winter of 2009. Credit for averting a major economic catastrophe must be awarded to Ben Bernanke and the Federal Reserve, for the unorthodox methods used to pump money into the US economy through a variety of means.
While the lasting affects of the Fed's many moves are still unknown, it's nearly certain that their actions helped keep the economy of not only the US, but the entire world, from falling off a cliff.
Investors cheered the news, at one point sending the Dow Jones Industrials up over 150 points. Afternoon trading trimmed some of the gains, but it was the best showing for stocks in two weeks and the 4th straight week of improvement on the major indices.
The NASDAQ surpassed the magic 2000 mark, while the S&P 500 leaped over 1000. The Dow closed at its highest point since November 4, 2008 (9625.28). Nothing more than continued improvement in employment was needed to send stocks on a tear. If payrolls continue to be slashed at ever-smaller rates, month-over-month, that will be absolutely the tonic the US economy needs to begin a growth path and for companies to eventually begin hiring. The creation of American jobs is the #1 issue facing the economy and the news of the day put a positive tint on the entire labor picture.
Dow 9,370.07, +113.81 (1.23%)
NASDAQ 2,000.25, +27.09 (1.37%)
S&P 500 1,010.48, +13.40 (1.34%)
NYSE Composite 6,586.71, +69.04 (1.06%)
Advancing issues finished well ahead of decliners in the broad-based rally, 4749-1729, while new highs continued to sprout up, numbering 210 on the day, as compared to just 79 new lows. The only small negative was volume, which tracked a bit slower than the previous two down sessions, though not considerably. With the amount of fund money still in hiding, there still seems to be a mood of caution, though Monday may prove to be a test of how long investors are willing to watch profits slip by before taking the plunge back into stocks.
NYSE Volume 1,484,737,000
NASDAQ Volume 2,345,724,000
Commodities were almost uniformly priced lower, with September light crude losing $1.01, to $70.93 and gold slipping $3.40, to $959.50. Silver bucked the trend, gaining 2 cents, to $14.67.
The jobs data was about as positive a sign investors have seen since the depths of the financial crisis in the Fall of 2008 and Winter of 2009. Credit for averting a major economic catastrophe must be awarded to Ben Bernanke and the Federal Reserve, for the unorthodox methods used to pump money into the US economy through a variety of means.
While the lasting affects of the Fed's many moves are still unknown, it's nearly certain that their actions helped keep the economy of not only the US, but the entire world, from falling off a cliff.
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